Framing it as a case of “broken promises, notorious Hollywood accounting, self-dealing and uncontrolled power by Warners,” Alan Ladd Jr.’s attorney asked a jury Monday to award nearly $3.2 million in damages on Ladd’s claim that a slate of films he produced for the studio was underallocated for TV and cable sales.
As closing arguments neared their conclusion Monday, Warner Bros. attorney Michael Bergman told the jury to ask themselves why the studio would shortchange itself 95% to deprive Ladd of his 5% profit participation.
“Why would Warner bite off its nose to spite its face?” asked Bergman.
Ladd’s attorney, John Gatti, told jurors that Ladd’s 5% profit participation on domestic and international TV and cable deals on the last films he produced at Warner Bros. was undervalued by $3.2 million.
The films — “Blade Runner,” “Body Heat,” “Night Shift,” “Tequila Sunrise,” “Outland,” “Chariots of Fire” and six installments in the “Police Academy” series — were undervalued to the tune of $97.2 million by Warner, Gatti told jurors. Gatti told them to disregard fees on “Tequila Sunrise,” “Outland” and “Police Academy 6” because Warner said these are not in profit yet.
Unlike the bulk of the films in question, in which Ladd had a 5% profit participation, Gatti said Ladd’s deal called for just 2.5% on “Chariots of Fire.”
The total damages that Ladd is seeking is $3.2 million, his percentage of the $97.2 million that Gatti said was unfairly allocated.
Interestingly, while the list of Ladd’s pics include such classics as “Blade Runner” and “Body Heat,” the bulk of the damages is allocated to the “Police Academy” films.
Bergman told jurors that Warner did a “fantastic” job of selling the films. He pointed out that on the 11 films at issue, the studio has earned a total of $300 million in license fees in TV sales and the Ladd Co. has received $21 million.
Bergman said Ladd’s claim ignores the reality that buyers purchase groups of films, not individual films, but that each film does have an individual price. He also attacked Ladd’s claim that Ladd’s A-level films should have had a higher fee attributed to them.
“If you are buying for a martial arts channel, a karate film may be worth more to you than ‘Chariots of Fire.’
“People have children, and they like to watch Bugs Bunny and Donald Duck,” said Bergman, addressing Ladd’s disparagement of these cartoons and the high fees they’ve received.
“Films age,” Bergman also pointed out, “and so do stars, which affects the prices.”
“Steve Guttenberg was a star when he made ‘Police Academy,’ said Bergman. “But he is unknown today.” “Domestic box office has little do with the license fee,” he said. “That’s the biggest myth in licensing.”
Ladd and his partner in the Ladd Co., Jay Kantor, are suing Warner Bros., alleging that license fees for domestic and international TV and cable sales on pictures such as “Blade Runner” and “Chariots of Fire” were unfairly allocated. Last week, L.A. Superior Court Judge Ricardo Torres dismissed and limited several of Ladd’s claims.
Ladd’s claim that the Ladd Co. logo was omitted on the packaging on a number of DVDs was dismissed on the grounds that the damages were too speculative. A claim involving profit participation on “Blade Runner” was dismissed because it breached a prior settlement with the studio.
The allocation claim — that when a group of films are licensed for sale, the stronger films in the package are unfairly shortchanged in the allocation of the revenue derived from the pact — survived but was limited to a span of four years before the suit was filed.
Closing arguments were expected to wrap today.